Germany Revives EV Subsidies... Chinese Manufacturers Also Eligible

Germany Unveils 5 Trillion Won EV Subsidy Program
Chinese Automakers Also Expected to Benefit
Subsidies to Vary by Income Level

Germany has reintroduced electric vehicle subsidies, which it had previously abolished.

According to the Financial Times (FT) and other sources, on January 19 (local time), the German government unveiled a new electric vehicle subsidy program worth a total of 3 billion euros (approximately 5.1 trillion won). This measure aims to support the domestic automotive industry and expand demand for electric vehicles in Germany.

AP Yonhap News

A key feature of this program is that it does not discriminate based on the country of origin. While the German government has set supporting domestic automakers as a policy goal, it does not plan to exclude foreign manufacturers, such as those from China, from eligibility for subsidies.

German Environment Minister Karsten Schneider stated, "Claims that Chinese automakers are taking over the German market cannot be confirmed by actual figures or on the roads," adding, "We are simply responding to competition, and we are not imposing restrictions targeting any specific country."

The FT reported that the new subsidy program will be open to all automakers, including those from China. As a result, analysts suggest this may benefit Chinese electric vehicle companies such as BYD.

BYD sold about 23,000 vehicles in Germany last year, an eightfold increase from the previous year, but its market share remains below 1 percent. Industry experts believe that if Chinese electric vehicles with strong price competitiveness become eligible for purchase subsidies, accessibility for German consumers could increase significantly. When subsidies are provided, the perceived price of relatively affordable Chinese electric vehicles will drop even further.

This approach by Germany contrasts with other European countries. The United Kingdom also operates a support system for electric vehicle purchases, but in practice restricts Chinese manufacturers' participation through environmental standards and technical requirements.

Through this subsidy program, the German government plans to support the purchase or lease of approximately 800,000 new vehicles by 2029. Subsidies will vary between 1,500 and 6,000 euros (approximately 2.6 million to 10.3 million won) depending on household income and the number of household members. Plug-in hybrid vehicles and range-extended models that meet certain emission standards will also be eligible for support.

This measure reflects strong demands from the automotive industry. According to the FT, battery vehicle sales in Germany fell by 27 percent in 2024. Although a recovery followed, with new registrations last year reaching about 545,000 units-surpassing 2023-overall market uncertainty persists.

The German Association of the Automotive Industry (VDA) welcomed the new subsidy program but pointed out that, without simultaneous expansion of charging infrastructure, its effects may be only short-term.